Franchising | June 2011 | By Daniel P. Smith

The 10 Best Franchise Deals

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Popeyes Louisiana Kitchen

Popeyes Louisiana Kitchen’s culinary roots in the Cajun and Creole regions of Louisiana distinguish it from its chicken rivals and inspire revenue. Among freestanding Popeyes restaurants that opened in 2009, AUV during the first 52 weeks of operation approached $1.5 million.

 

U.S. Unit Count:

1,610 (1,573 franchised)

Franchise Fee:

$30,000

Total Start-Up Costs:

$292,300–$422,100

Royalty:

5% of gross sales

Renewal Fee:

$15,000

Marketing Fee:

4% of gross sales

According to vice president of development Greg Vojnovic, Popeyes is not a fee-driven concept, which creates a collaborative franchise relationship. Popeyes headquarters offers support and expertise in menu, operations, marketing, development, and profitability.

 

“The best way for our company to be successful is to ensure our franchisees’ success and loyalty,” Vojnovic says, adding that multiple lending relationships and incentive programs for both new franchisees and veterans have accelerated Popeyes’ domestic and international growth.

 

An Outside View: “Popeyes is a very solid and well-established opportunity in a very crowded market,” Kincheloe says. “The company is well established and can offer great support to a franchisee who has little experience and would like to get into the restaurant industry.”

Carl’s Jr.

U.S. Unit Count:

1,097 (674 franchised)

Franchise Fee:

$35,000 for up to 2 units
$30,000 for 3–4 units
$25,000 for 5+ units

Total Start-Up Costs:

$1.2 million–$1.4 million

Royalty:

4% of gross sales

Renewal Fee:

$5,000 for less than 5 years;
$10,000 for 5–10 years

Marketing Fee:

5.5% of gross sales

A consistent management team has maintained Carl’s Jr.’s focus on brand positioning, sparking same-store sales increases in nine of the last 11 years. Rather than playing in the discounting space with its rivals, Carl’s Jr. achieved value in customer satisfaction and high-quality menu items, such as Black Angus burgers and hand-scooped milkshakes. CKE Restaurants vice president Ned Lyerly calls the Carl’s Jr. strategy “good for margins and our franchisees.”

 

CKE corporate assists franchisees with site selection, restaurant design in flexible sizes, construction, and training. CKE sister brand Hardee’s boasts similar elements in the Midwest and East Coast marketplaces.

 

An Outside View: “Carl’s Jr. does a great job with rolling out and promoting new products, [though] the franchisee pays for this through slightly higher marketing fees than other similar franchises,” Kincheloe says.

Saladworks

U.S. Unit Count:

93 (93 franchised)

Franchise Fee:

$35,000

Total Start-Up Costs:

$343,802–$494,027

Royalty:

5% of net sales

Renewal Fee:

$17,500

Marketing Fee:

3% of net sales for
non-foodcourt units;
1.5% for foodcourt units

Positioned as a healthy concept in an increasingly health-conscious nation bolsters Saladworks’ appeal and marketplace positioning, while the company’s AUV of $820,000 represents a nearly 2:1 sales-to-investment ratio.

 

From the company’s Pennsylvania headquarters, corporate staffers provide franchisees (at a 1:3 staff-to-franchisee ratio) guidance on everything from marketing to operational best practices. Last year, an affiliated organization, Saladworks Leasing, began offering qualified new and multiunit franchisees “who best display the company’s core values” the opportunity to own a Saladworks unit for $75,000, a move that is helping Saladworks expand from its mid-Atlantic base.

 

“We’re about helping our franchisees succeed in whatever ways possible,” Saladworks president Paul Steck says.

 

An Outside View: “Saladworks is one of many concepts attacking the health trend,” Kincheloe says, “and is best positioned to succeed when placed in the right market and demographic for its menu offerings.”

Bojangles’ Famous Chicken ’N Biscuits

U.S. Unit Count:

491 (302 franchised)

Franchise Fee:

$25,000

Total Start-Up Costs:

$357,000–$771,000

Royalty:

4% total sales

Renewal Fee:

$12,500

Marketing Fee:

1% of total sales

Bojangles’ Famous Chicken ’N Biscuits’ executive vice president Eric Newman calls his brand a barrier-crossing restaurant. With 40 percent of its business in breakfast, plus fresh-made biscuits and a flavor profile characterized by hand-breaded chicken and high-quality side items, Charlotte, North Carolina–based Bojangles’ has become one of the nation’s fastest growing quick serves.

 

“We’re bringing full-service dining components into quick service and customers have responded,” Newman says. “We’ve got the breakfast and dinner pieces going on alongside a lunch lineup to compete with anyone.”

 

Throughout the recession, Bojangles’ attained same-store sales growth along with historically high unit growth. The company’s AUV of nearly $1.6 million for its traditional full-sized outlets, meanwhile, lifts it into the upper tier of all quick-service concepts.

 

An Outside View: “Bojangles’ continues to be strong in their maturity as a franchise company and chicken brand,” Spencer says. “Their base of strong multiunit franchise owners will help them to not only continue to develop, but will assist in appealing to new franchisees.”